Minden Company introduced a new product last year for which itis trying to find...

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Accounting

Minden Company introduced a new product last year for which itis trying to find an optimal selling price. Marketing studiessuggest that the company can increase sales by 5,000 units for each$2 reduction in the selling price. The company’s present sellingprice is $99 per unit, and variable expenses are $69 per unit.Fixed expenses are $831,600 per year. The present annual salesvolume (at the $99 selling price) is 25,700 units.
Required:
1.
What is the present yearly net operating income or loss?

2.
What is the present break-even point in unit sales and in dollarsales?

3.
Assuming that the marketing studies are correct, what is themaximum annual profit that the company can earn? At how many unitsand at what selling price per unit would the company generate thisprofit?

4.
What would be the break-even point in unit sales and in dollarsales using the selling price you determined in (3) above (e.g.,the selling price at the level of maximum profits)?

Answer & Explanation Solved by verified expert

4.5 Ratings (984 Votes)

Contribution margin per unit Sales per unit Variable expenses per unit 9969 30 per unit Total Contribution margin Annual sales volume Contribution margin per unit 2570030 771000 1 Present See Answer

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In: AccountingMinden Company introduced a new product last year for which itis trying to find an...Minden Company introduced a new product last year for which itis trying to find an optimal selling price. Marketing studiessuggest that the company can increase sales by 5,000 units for each$2 reduction in the selling price. The company’s present sellingprice is $99 per unit, and variable expenses are $69 per unit.Fixed expenses are $831,600 per year. The present annual salesvolume (at the $99 selling price) is 25,700 units.Required:1.What is the present yearly net operating income or loss? 2.What is the present break-even point in unit sales and in dollarsales? 3.Assuming that the marketing studies are correct, what is themaximum annual profit that the company can earn? At how many unitsand at what selling price per unit would the company generate thisprofit? 4.What would be the break-even point in unit sales and in dollarsales using the selling price you determined in (3) above (e.g.,the selling price at the level of maximum profits)?

Required:
1.	What is the present yearly net operating income or loss?

2.	What is the present break-even point in unit sales and in dollarsales?

3.	Assuming that the marketing studies are correct, what is themaximum annual profit that the company can earn? At how many unitsand at what selling price per unit would the company generate thisprofit?

4.	What would be the break-even point in unit sales and in dollarsales using the selling price you determined in (3) above (e.g.,the selling price at the level of maximum profits)?